M&A deals within India to triple by 2019

The total amount of mergers and acquisition transaction in India will almost triple to $49.3 billion in 2017, from $17.5 billion in 2016, before falling off to $38.8 billion in 2020.Joel Rebello | ET Bureau | February 07, 2017, 18:27 IST

MUMBAI: An accommodative stance by the Reserve Bank of India (RBI) and strong domestic demand will help triple both inbound as well as domestic acquisitions into India, making the country global hotspot in the next three years, US based law firm Baker McKenzie said in a report on February 7, 2017.

The Chicago based firm which is present in 47 countries globally predicts that the total amount of merger and acquisition transactions in India including domestic deals will almost triple to $49.3 billion in 2019, from $17.5 billion in 2016, before falling off to $38.8 billion in 2020.

Along with a Global Transactions Forecast, Baker McKenzie along with Oxford Economics surveyed 100 business leaders in Asia Pacific which found that India was the most focused on improving its business environment in the region.

“When asked how much economic influence India was expected to have in the next five years across the Asia Pacific region, a full 95% of senior executives see India as having a greater economic influence, including a third who see India as having far greater influence. This compares with 76% of respondents that said China would have more influence in the region, and just 20% who said the US would have more influence, compared with 42% of survey respondents who thought the US would have less or far less influence,” the survey said.

The firm predicts that threats to the stability of the global economy will ease which will spur deals the world over. "As the US potentially becomes more inward looking and protectionist, and Europe deals with elections and Brexit negotiations, an increasing share of the growth in international trade and investment will by necessity come from intra-Asia Pacific activity,” said Gary Seib, Chair, Asia Pacific, Baker McKenzie. “Business leaders are expecting more confident, outward looking Indian corporates to be looking for new opportunities.”

However, the firm described the government’s progress on economic reforms and opening up foreign direct investment as “disappointing” though it lauded India’s fast brisk economic growth rate.

“Ultimately people want certainty. They don’t like surprises like tax uncertainties. India for example had done well in the ease of doing business ranking about two years ago but it has gone up just two notches in the past year. But India is still going to grow at 7% for the next ten years and things like the new Bankruptcy Code will help,” said Ashok Lalwani, global head of Baker McKenzie's India Practice.

Baker McKenzie predicts India’s rank at 54 in ease of doing business between the period 2015 to 2020 compared to the global average of 62.

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